Sarah Bradford explores the tax consequences of taking dividends or a salary/bonus from a personal or family company.
A company is a separate legal entity, and if you operate your business as a personal or family company you will need to extract the profits if you want to use them for your personal use.
There are various ways of doing this, including taking a salary/bonus or paying dividends, and the associated tax consequences will vary with the method chosen. For 2023/24, the changed corporation tax regime adds a new dimension.
This article looks at the tax implications of different profit extraction strategies.
Corporation tax changes
From 1 April 2023, the rate at which a company pays corporation tax depends on the level of its taxable profits and whether it has associated companies.
From that date, corporation tax
